REWARDS, NOT DISCOUNTS CITED AS BEST CUSTOMER INCENTIVE

ARLINGTON, Texas -- Retailers need to move their frequent-shopper programs beyond electronic discounts, and begin rewarding their best customers with creative incentives as the means of achieving customer loyalty.Retailers can also use frequent shopper data collected at point-of-sale to attune store operations, such as category management and labor scheduling, to their best customers' needs."The problem

ARLINGTON, Texas -- Retailers need to move their frequent-shopper programs beyond electronic discounts, and begin rewarding their best customers with creative incentives as the means of achieving customer loyalty.

Retailers can also use frequent shopper data collected at point-of-sale to attune store operations, such as category management and labor scheduling, to their best customers' needs.

"The problem I have with supermarket frequent shopper programs is that many of them are boring," said Carlene Thissen, president of Retail Systems Consulting, Naples, Fla. "They have become an electronic version of trading stamps.

"If you reside in a market where all retailers with frequent-shopper programs are supplying electronic discounts, the program is not fun and exciting," she added. "I do not see many programs adding value, or simplifying customers' lives."

Thissen spoke at the session titled, "Establishing A Customer Loyalty Program -- Looking Beyond The Technology," at the Retailer Owned Research Company's National User's Conference, held here June 7-9.

While retailers do not necessarily need to abandon electronic discounts, they need to get creative and explore new domains, including the addition of incentives, according to Thissen. In most cases, retailers do not need to look much further than their card-based applications to decide which incentives to pursue.

"I like to see retailers ask for data they can use, such as birth dates, children's birth dates, and pets' birth dates," she explained. "This is the kind of information that can provide opportunities. Do not ask for too much information, especially what you will not need, or you will get bogged down [with data]."

One way to reward customers based on customer-specific dates is to mail loyal shoppers a "birthday package" when a child's birthday approaches.

"A week before the child's birthday a retailer can mail loyal shoppers a package including discounts on all the items needed for a birthday party, such as pizzas, sodas, balloons and cakes," said Thissen. "My suggestion is to offer this to your best customers, rather than all customers."

According to Thissen, Paw Paw Shopping Center, Paw Paw, Mich., is using this approach, and has taken it even further. Each time one of the retailer's best customers' birthday approaches, Paw Paw sends a birthday card inviting the customer into the store for a complimentary six-inch birthday cake from its bakery department.

"Customers are excited not only to get this card, but also to receive a completely decorated cake from the retailer," she explained. "The card works two-fold, because it is thanking them for their loyalty, and it is selling Paw Paw's bakery."

Retailers should also use their information systems to reward their best customers. "For example, as a loyal shopper scans their club card at a retailer's [in-store] kiosk, the network can alert the store manager that one of his best shoppers is in the store," Thissen said. "The manager can meet up with the customer in the aisle and offer a cup of coffee, ask if an associate can help pick her groceries, or just say hello."

Retailers should also be looking to their accumulated POS data to offer additional rewards.

"By analyzing data, retailers can tell when their loyal customers shop and what exactly they are buying," she said. Lees Supermarkets, Westport, Mass., "analyzed its data hourly to learn when its best customers were shopping the store," Thissen said. "The retailer scheduled its associates around their shopping times to provide better service to these customers during their visits."

In addition, retailers are merging customer data and category management information to learn what items their best customers are buying. "Combining these files lets retailers stock the store based on the items their loyal customers buy," she said. "This data can also lead to customer-specific marketing, as it shows what they buy, what they like and what they need. Not many retailers are doing this yet, but they will."

By using accumulated data, retailers can learn to make their programs profitable, she said. Retailers need to use decile reports to learn abuout their top 10% of customers, and their worst customers as well," Thissen said. "Use that data to reward customers."

According to Thissen, retailers need to keep the customer's shopping experience exciting so they will return to their stores.

"Retailers need to revolutionize the customer's experience, make sure the program has value, and use creativity when implementing different ideas," she explained. "This is an art form, not a science. Retailers need to implement ideas based on what is best for their store and environment. There are no black and white answers."